application business sales prices

[HBFOXJr]

Does anyone have any knowledge of what Tru Green/Chem Lawn pays for application businesses?

Anyone heard rumors?

Any first hand experiences?

Anyone bought or sold and applications businesses lately?

I'm looking to aquire more and wonder what the big boys offer.

[bruces]

I have heard 100% of gross.

That is only hearsay, no fact, no experience.

[kutnkru]

When they solicited business in our area several years back they offered to buy you outright dollar for dollar - just as bruces said, which is UNHEARD of!!!

They went through the list of applicators in the area and made the same offer to each and every one. I believe they also attached a four(4) year non-compete clause that went along with their "generous" offer.

Hope this helps.

[Casey]

Met a guy from the minneapolis area that told me they offered him $150 for any customer that he had serviced anytime in the previous three years.....supposedly didn't even have to be current customers.....as long as they weren't already with Chem Lawn

[HBFOXJr]

How about pay out terms on these purchases?

[John Allin]

TGCL has cut way back on acquisitions and is focusing on integrating what they acquired over the years - a large task to say the least.....

However, back when the buying frenzy was in place they were paying up to 10 times earnings, and often paid considerably more than one-to-one on overall sales. That's not happening any more. 3-4 times earnings is more prevelant at this point in time. TGCL's standard non-compete is 5 years on a buy out. And, TGCL paid about 20% in cash up front, a portion over 5 years (over the life of the non-compete so that if you violated it they could hold back some dough) with the balance in stock (not necessarily a good deal there - in hindsight). I am good friends with a few fellows that got bought up back then, and know a couple who were intimately involved in the Landcare roll up.

If you're looking to purchase a smaller operation(s), they won't have a good handle on their 'earnings', so you might get to buy them for considerably less than they are actually worth. Unfortunately, most small operators think their business is worth more than it really is..... so it can be a catch 22 situation.

Several other large operators are purchasing companies now and 3-4 times earnings are what the discussions are centering on, with a small up front payout, and balance over 3-5 years.

When we do it, we tie the payout to customer retention ratios, which is an incentive to the seller to participate in keeping customers on the list for the duration of the payout.